Coal sector stocks are among the biggest losers in the Hong Kong market.

At the time of writing, Yankuang Energy (01171.HK) shares were down 7.36% at HK$13.10. Yancoal Aus (03668.HK) fell 7.09% to HK$33.28. China Coal (01898.HK) dropped 5.17% to HK$11.56, while China Shenhua (01088.HK) declined 4.94% to HK$43.06.

This downward movement follows recent developments affecting the supply outlook. The Shaanxi Provincial Development and Reform Commission issued a notice regarding energy supply guarantees for the summer peak in 2026, which has directly reversed earlier expectations for a contraction in coking coal supply.

Additionally, geopolitical developments have weighed on energy prices. Former U.S. President Donald Trump's comments about a potential peace agreement with Iran, alongside confirmation from an Iranian deputy foreign minister regarding a memorandum of understanding, have contributed to a decline in oil prices. Both WTI and Brent crude futures fell by around 5% intraday, cooling expectations for energy substitution.

Analysts point to specific pressures on coking coal prices. A research note from CF Futures highlights that upward pressure is concentrated on expectations for increased imported coal volumes and the pace of domestic mine resumptions.

The firm suggests that incremental supply from Mongolian and seaborne coal could materialize by the end of the month. Furthermore, considering the duration of intensified domestic mine safety inspections and the training period required to convert temporary workers responsible for off-book production into formal employees, an improvement is also anticipated by month-end.

The analysis adds that, given the limited profit margins for steel mills and iron ore, the scope for downstream sectors to absorb higher costs is insufficient to support a more substantial price increase for coal.